I have read that interfacial polarization occurs due to interactions between grain boundaries inside a dielectric. But what exactly it is? and in which frequency range it can be observed?
Interfacial polarization is due to the charge accumulation at the interface of two materials that have different permittivites and conductivities. If becomes prominent if the matrix phase is insulating and the incluson has higher conducitivity. The simplest model is bilayer dielectric, but formulas have been developed for more complicated geometries. The frequency of the interfacial (or Maxwell-Wagner-Sillars) polarization depends mainly on the conductivity of the inclusion, the accompanying change in the apparent permittivity depends on the shape, concentration and orientation of the inclusions. There are also statistical mixtures, where the behavior is somewhat different. If you look at my publication list, you can find papers on bilayer dielectrics, mixture formulas etc. from the 1980-s. If you have specific question, please contact me.
In interfacial or space-charge polarization mobile charge carriers in a heterogeneous material migrate an appreciable distance through the dielectric until they are trapped or impeded by physical barriers. This build-up of charge dictates the polarization of the material. Grain/phase boundaries and free surface are common barriers .